Corporate Insolvency Resolution: Deccan Chronicle Holdings Case Explained

The case of SREI Multiple Asset Investment Trust Vision India Fund v. Deccan Chronicle Marketeers & Others revolves around the resolution process of Deccan Chronicle Holdings Ltd. (DCHL) under the Insolvency and Bankruptcy Code, 2016 (IBC). The dispute arose over the approval of the resolution plan and the rights to the trademarks “Deccan Chronicle” and “Andhra Bhoomi.” The matter reached the Supreme Court, which had to decide whether the adjudicating authority’s decision altered the approved resolution plan, thereby exceeding its jurisdiction.

Background of the Case

Deccan Chronicle Holdings Ltd., incorporated in 2002, was engaged in the business of printing and publishing newspapers such as “Deccan Chronicle” and “Andhra Bhoomi.” The company fell into financial distress, prompting Canara Bank, a financial creditor, to initiate Corporate Insolvency Resolution Process (CIRP) under IBC. The National Company Law Tribunal (NCLT) admitted the petition on July 5, 2017, and imposed a moratorium under Section 14, halting legal proceedings against DCHL.

The resolution process invited expressions of interest, leading to the selection of SREI Multiple Asset Investment Trust Vision India Fund as the successful resolution applicant (SRA). The resolution plan was approved by the Committee of Creditors (CoC) with an 81.39% majority and conditionally approved by NCLT on June 3, 2019.

Key Issues in the Case

Whether NCLT’s decision on trademarks modified the approved resolution plan.
Whether the adjudicating authority had the jurisdiction to determine ownership of trademarks.
Whether the resolution applicant acquired perpetual exclusive rights or ownership of the trademarks.

Arguments by the Petitioner

The petitioner, SREI Multiple Asset Investment Trust, argued that the resolution plan had already granted it exclusive rights to use the trademarks, which was crucial for running the business. It contended that:

The adjudicating authority’s order affirming DCHL’s ownership of trademarks contradicted the resolution plan.
The National Company Law Appellate Tribunal (NCLAT) erred in holding that NCLT’s order modified the resolution plan.
The resolution plan approved by CoC with an 81.39% majority was binding on all stakeholders.

Senior Counsel Mr. K.V. Viswanathan argued:

“The adjudicating authority has merely affirmed what was already approved by CoC, and the NCLAT’s conclusion that it modified the resolution plan is legally untenable.”

Arguments by the Respondent

The respondents, including other creditors and stakeholders, opposed the petition, stating:

The resolution plan only granted the right to use trademarks but did not confer ownership.
The adjudicating authority exceeded its jurisdiction by declaring ownership of trademarks.
The matter of trademark ownership should have been dealt with under the Trademarks Act, 1999.

Senior Counsel Mr. P. Chidambaram contended:

“The adjudicating authority has transgressed its jurisdiction by declaring the ownership of trademarks, which is impermissible under IBC.”

Key Observations by the Supreme Court

The Supreme Court analyzed the resolution plan and relevant legal provisions. It noted:

Clause 11.12 of the resolution plan provided perpetual exclusive rights to use trademarks but did not confer ownership.
The adjudicating authority’s order declaring ownership rights amounted to a modification of the resolution plan, which is impermissible.
Any change in the approved resolution plan requires fresh approval by the CoC.

The Court held:

“A resolution plan, once approved by the CoC and the adjudicating authority, cannot be altered unless specifically permitted by law. The adjudicating authority’s decision went beyond the scope of its powers.”

Final Judgment

The Supreme Court dismissed the appeal, holding that:

The resolution applicant has a perpetual exclusive right to use the trademarks but does not own them.
The adjudicating authority’s declaration of ownership rights over trademarks was ultra vires and rightly set aside by NCLAT.
The approved resolution plan remains binding on all stakeholders.

The judgment reaffirmed the principle that resolution plans must be implemented as approved, without subsequent modifications by adjudicating authorities beyond their jurisdiction.

Petitioner Name: SREI Multiple Asset Investment Trust Vision India Fund.
Respondent Name: Deccan Chronicle Marketeers & Others.
Judgment By: Justice Ajay Rastogi, Justice Bela M. Trivedi.
Place Of Incident: Hyderabad.
Judgment Date: 17-03-2023.

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